Waste Management 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 238

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232
  • 233
  • 234
  • 235
  • 236
  • 237
  • 238

2014 ANNUAL REPORT

Table of contents

  • Page 1
    2014 ANNUAL REPORT

  • Page 2
    Proxy Statement

  • Page 3
    ... our independent registered public accounting firm for the fiscal year ending December 31, 2015; • To vote on a proposal to approve our executive compensation; • To vote on a proposal to amend our Employee Stock Purchase Plan (the "ESPP") to increase the number of shares authorized for issuance...

  • Page 4
    ... Page GENERAL INFORMATION ...BOARD OF DIRECTORS ...Leadership Structure ...Role in Risk Oversight ...Independence of Board Members ...Meetings and Board Committees ...Audit Committee ...Audit Committee Report ...Management Development and Compensation Committee ...Compensation Committee Report...

  • Page 5
    PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS WASTE MANAGEMENT, INC. 1001 Fannin Street, Suite 4000 Houston, Texas 77002 Our Board of Directors is soliciting your proxy for the 2015 Annual Meeting of Stockholders and at any postponement or adjournment of the meeting. We are furnishing proxy ...

  • Page 6
    ... depending on the type of proposal. For the proposal to ratify selection of the Company's independent registered public accounting firm, the broker may vote your shares at its discretion. But for all other proposals in this Proxy Statement, including the election of directors, the advisory vote...

  • Page 7
    ... to the use of the mail, proxies may be solicited personally, by Internet or telephone, or by Waste Management officers and employees without additional compensation. We pay all costs of solicitation, including certain expenses of brokers and nominees who mail proxy materials to their customers or...

  • Page 8
    ...-employee directors should address their communications to Mr. W. Robert Reum, Non-Executive Chairman of the Board, c/o Waste Management, Inc., P.O. Box 53569, Houston, Texas 77052-3569. Leadership Structure We separated the roles of Chairman of the Board and Chief Executive Officer at our Company...

  • Page 9
    ... Internal Audit, Environmental Audit, Business Ethics and Compliance, Human Resources, Government Affairs, Information Technology, Risk Management, Safety and Accounting functions. One of the purposes of these presentations is to provide direct communication between members of the Board and members...

  • Page 10
    ...Gluski and Reum are Audit Committee financial experts as defined by the SEC based on a thorough review of their education and financial and public company experience. Mr. Gross was a founder of American Management Systems where he was principal executive officer for over 30 years. Since 2001, he has...

  • Page 11
    ... management the type of earnings guidance that we provide to analysts and rating agencies; • Discuss with the independent auditor any material changes to our accounting principles and matters required to be communicated by Public Company Accounting Oversight Board (United States) Audit Standard...

  • Page 12
    ...that the Company's financial statements be included in its annual report: • First, the Audit Committee discussed with Ernst & Young, the Company's independent registered public accounting firm for fiscal year 2014, those matters required to be discussed by Public Company Accounting Oversight Board...

  • Page 13
    ...'s financial statements be included in its annual report for its fiscal year ended December 31, 2014. The Committee has also approved the selection of Ernst & Young as the Company's independent registered public accounting firm for fiscal year 2015. The Audit Committee of the Board of Directors...

  • Page 14
    ... the MD&C Committee. No member of the MD&C Committee was an officer or employee of the Company during 2014; no member of the MD&C Committee is a former officer of the Company; and during 2014, none of our executive officers served as a member of a board of directors or compensation committee of any...

  • Page 15
    ... of the Nominating and Governance Committee, Waste Management, Inc., 1001 Fannin Street, Suite 4000, Houston, Texas 77002, between October 28, 2015 and November 27, 2015. Related Party Transactions The Board of Directors has adopted a written Related Party Transactions Policy for the review and...

  • Page 16
    ...the long-term success of the Company. Equity Compensation Non-employee directors receive an annual grant of shares of Common Stock under the Company's Stock Incentive Plan. The shares are fully vested at the time of grant; however, non-employee directors are subject to ownership guidelines discussed...

  • Page 17
    ... shares to pay all applicable taxes, be held during their tenure as a director and for one year following termination of Board service. The MD&C Committee updated the guidelines in May 2014 to account for the Company's more recent sustained stock price. The updated guidelines require each director...

  • Page 18
    ...Corporation from 2001 to 2004. Director of BMO Financial Corp., a private corporation, since 2005. Director of Aetna, Inc. since 2006. 14 Mr. Anderson served in the positions of chief executive officer and chief operating officer of a large public retail company for several years, during a customer...

  • Page 19
    ... Management Systems, Inc., a global business and information technology firm, where he was principal executive officer for over 30 years. As a result, he has extensive experience in applying information technology and advanced data analytics in global companies. His background, education and board...

  • Page 20
    ..., Inc., or predecessor challenges, high fixed-cost structure and significant companies, since 2001. capital requirements. His background, education and board service also provide him with expertise in Director of Con-way, Inc., or predecessor companies, finance and accounting. Mr. Pope has served on...

  • Page 21
    ... of NRG Energy, Inc. since 2003. Director of The Goodyear Tire & Rubber Company since 2004. Director of Amsted Industries Incorporated since 2007. Mr. Weidemeyer served in executive positions at a large public company for several years. His roles encompassed significant operational management...

  • Page 22
    ... on their holdings in the Company's Retirement Savings Plan stock fund. (2) The number of options includes options currently exercisable and options that will become exercisable within 60 days of our record date. (3) Executive officers may choose a Waste Management stock fund as an investment option...

  • Page 23
    ... as of October 31, 2014, the date of Mr. Aardsma's departure from the Company. (9) Included in the "All directors and executive officers as a group" are 15,588 stock equivalents attributable to the executive officers' collective holdings in the Company's Retirement Savings Plan stock fund. 19

  • Page 24
    ...679(3) 6.5 27,013,916(4) 5.9 (1) Percentage is calculated using the number of shares of Common Stock outstanding as of March 16, 2015. (2) This information is based on a Schedule 13G/A filed with the SEC on February 13, 2015. Capital World Investors reports that it is deemed to be the beneficial...

  • Page 25
    ... to August 2012. • Senior Manager of Financial Reporting from July 2007 to June 2010. • Senior Vice President - Human Resources since May 2012. • Vice President and Assistant General Counsel - Labor and Employment from December 2000 to May 2012. • Executive Vice President and Chief Operating...

  • Page 26
    ...'s employment with the Company terminated in December 2014 when we completed the sale of our Wheelabrator business, which provides waste-to-energy services and manages waste-to-energy facilities and independent power production plants. Executive Summary The objective of our executive compensation...

  • Page 27
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 28
    ... need to grow our Company while continuing our focus on pricing, capital allocation and cost control. As a result, the MD&C Committee has approved keeping the 2015 annual cash and long-term incentive compensation program design consistent with the 2014 compensation program design. This consistency...

  • Page 29
    ..., including strategic importance of the named executive's role, the executive's experience and individual performance; • Target short-term and long-term incentive opportunities should generally be set at the competitive median; and • Total direct compensation opportunities should generally be...

  • Page 30
    ... price of our Common Stock on the date of grant. Stock options have a term of ten years. Post-Employment and Change-in-Control Compensation. The compensation our named executives receive post-employment is based on provisions included in individual equity award agreements, retirement plan documents...

  • Page 31
    ... plan, participating employees generally can elect to receive distributions commencing six months after the employee leaves the Company in the form of annual installments or a lump sum payment. We believe that providing a program that allows and encourages planning for retirement is a key factor...

  • Page 32
    ...total compensation, including the base salary, target annual cash incentive award opportunities, long-term incentive award opportunities and other benefits, including potential severance payments for each of our named executive officers. At a regularly scheduled meeting each year, the MD&C Committee...

  • Page 33
    ... ranging in size from $100 million to over $100 billion in annual revenue. Data selected from these surveys is scoped based on Company revenue; and • Median compensation data from a comparison group of 19 publicly traded U.S. companies, described below. The comparison group of companies is...

  • Page 34
    ...general industry data and the comparison group are each weighted 50%. Competitive compensation analysis for the other executive officers consists only of an average of size-adjusted median general industry survey data. The competitive analysis showed that 2014 total direct compensation opportunities...

  • Page 35
    ... or event generally should be disregarded unless, taken together, they change the calculated award payout by at least five percent. Tax and Accounting Matters. Section 162(m) of the Internal Revenue Code of 1985, as amended ("Code Section 162(m)"), denies a compensation deduction for federal income...

  • Page 36
    ... named executive officers to drive results while avoiding unnecessary or excessive risk taking that could harm the long-term value of the Company. During 2014, the MD&C Committee reviewed the Company's compensation policies and practices and the assessment and analysis of related risk conducted by...

  • Page 37
    ... executives received an annual cash incentive payment in March 2015 for fiscal year 2014 equal to 163.8% of target. The MD&C Committee develops financial performance measures for annual cash incentive awards to drive improvements in business operations, supporting and funding the long-term strategy...

  • Page 38
    ..., the MD&C Committee considers expected revenue based on analyses of pricing and volume trends, as affected by operational and general economic factors and expected costs. The MD&C Committee believes these financial performance measures support and align with the strategy of the Company and are...

  • Page 39
    ... Agreement. See "How Named Executive Officer Compensation Decisions are Made - Departure of Mr. Aardsma" above for additional information. Mr. Weidman's annual cash incentive payment was calculated and paid out in connection with the divestiture of our Wheelabrator business. See "How Named Executive...

  • Page 40
    ... with the following exclusions: capital expenditures for purposes of internal growth; costs associated with labor disruptions; and strategic acquisition, restructuring, and transformation and reorganization costs. The MD&C Committee retains the right to make additional adjustments to the calculation...

  • Page 41
    ...year Treasury rates, which are used to discount remediation reserves; (iii) withdrawal from underfunded multiemployer pension plans and labor disruption costs; and (iv) charges related to acquisition and integration, and earnings on account of, the acquired Greenstar and RCI businesses. Capital used...

  • Page 42
    ... fixed number of shares and were last updated in May 2014 to account for the Company's recent sustained Common Stock market value. The ownership requirement of our Chief Executive Officer and President is approximately six times base salary, using his 2014 base salary and a $40 per share stock price...

  • Page 43
    ... the Company's General Counsel's office to protect against transactions in our securities during a time when executives have material, non-public information. Additionally, it is our policy that executive officers are not permitted to hedge their ownership of Company securities, including trading in...

  • Page 44
    ..., programs and decisions. Summary Compensation Table Stock Awards ($)(1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($)(3) All Other Compensation ($)(4) Year David P. Steiner President and Chief Executive Officer 2014 2013 2012 Salary ($) Bonus ($) Total ($) 1,186,785 1,149,616...

  • Page 45
    ...-board catering, landing fees, trip related hangar/parking costs and other variable costs. We own or operate our aircraft primarily for business use; therefore, we do not include the fixed costs associated with the ownership or operation such as pilots' salaries, purchase costs and non-trip related...

  • Page 46
    ... Discussion and Analysis - How Named Executive Officer Compensation Decisions are Made - Departure of Mr. Aardsma" for additional information. (5) At the time of Mr. Weidman's departure from the Company in December 2014, the performance share units and stock options granted to him in March...

  • Page 47
    ...our 2009 Stock Incentive Plan. Please see "Compensation Discussion and Analysis - Named Executive's 2014 Compensation Program and Results - Long-Term Equity Incentives - Performance Share Units" for additional information about these awards, including performance criteria. The performance period for...

  • Page 48
    ... Number of Number of Securities Securities Underlying Underlying Unexercised Unexercised Option Options Options Exercise Exercisable Unexercisable Price (#)(2) (#) ($) - 70,693 109,440 583,333 331,008 280,899(3) 41.37 Market Number of Value of Shares or Shares or Units of Units of Stock Stock...

  • Page 49
    ...the MD&C Committee in February 2015. Following such determination, shares of the Company's Common Stock earned under this award were issued on February 17, 2015, based on the average of the high and low market price of the Company's Common Stock on that date. (2) We withheld shares in payment of the...

  • Page 50
    ...or Change-in-Control The payments our named executives receive upon termination or change-in-control are based on provisions included in employment agreements and individual equity award agreements. We enter into employment agreements with our named executive officers to provide a form of protection...

  • Page 51
    ...of the employee's termination of employment. The terms "Cause," "Good Reason," and "Change-in-Control" as used in the table below are defined in the executives' employment agreements and/or the applicable equity award agreement and have the meanings generally described below. You should refer to the...

  • Page 52
    ... those benefits. • Waste Management's practice is to provide all benefits eligible employees with life insurance that pays one times annual base salary upon death. The insurance benefit is a payment by an insurance company, not the Company, and is payable under the terms of the insurance policy...

  • Page 53
    ... by the Employee Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable in lump sum; one-half payable in bi-weekly installments over a two-year period) ...• Continued coverage under health and welfare benefit plans for two years ...• Prorated payment of...

  • Page 54
    ... by the Company or For Good Reason by the Employee Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable in lump sum; one-half payable in bi-weekly installments over a two-year period) ...• Continued coverage under benefit plans for two years • Health and...

  • Page 55
    ... by the Employee Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable in lump sum; one-half payable in bi-weekly installments over a two-year period) ...• Continued coverage under health and welfare benefit plans for two years ...• Prorated payment of...

  • Page 56
    ... by the Employee Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable in lump sum; one-half payable in bi-weekly installments over a two-year period) ...• Continued coverage under health and welfare benefit plans for two years ...• Prorated payment of...

  • Page 57
    ... by the Employee Severance Benefits • Two times base salary plus target annual cash bonus (one-half payable in lump sum; one-half payable in bi-weekly installments over a two-year period) ...• Continued coverage under health and welfare benefit plans for two years ...• Prorated payment of...

  • Page 58
    ... Company on October 31, 2014, he received, or is continuing to receive, the following payments and benefits: • Cash severance payable in lump sum ...$ 805,102 • Cash severance payable over two years ...$ 805,102 • Value of group health and dental coverage for two years payable over two years...

  • Page 59
    ... fees includes fees for the annual audit, reviews of the Company's Quarterly Reports on Form 10-Q, work performed to support the Company's debt issuances, accounting consultations, and separate subsidiary audits required by statute or regulation, both domestically and internationally. Audit-related...

  • Page 60
    ... and recent employment agreements, and has adopted a clawback policy applicable to annual incentive compensation, designed to recoup compensation when cause and/or misconduct are found; • our executive officer severance policy implemented a limitation on the amount of benefits the Company may...

  • Page 61
    ... take any action as a result of the outcome of the vote on this proposal. The MD&C Committee will carefully consider the outcome of the vote in connection with future executive compensation arrangements. THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION. 57

  • Page 62
    ... to acquire or increase their proprietary interest in the Company through the purchase of shares of Common Stock at a discount. Administration The ESPP is administered by the Administrative Committee of the Waste Management Employee Benefit Plans, a committee appointed by the Board of Directors. The...

  • Page 63
    ... of ESPP The Board of Directors may amend the ESPP at any time; provided, however, the ESPP may not be amended in any way (a) that will cause rights issued thereunder to fail to meet the requirements for employee stock purchase plans as defined in Section 423 of the Internal Revenue Code of 1986, as...

  • Page 64
    ... average purchase price per share of Common Stock purchased during the 2014 Offering Periods under the ESPP was $37.8158. Non-employee directors of the Company are not eligible to participate in the ESPP. Name/Group Number of Shares David P. Steiner ...James E. Trevathan, Jr ...James C. Fish, Jr...

  • Page 65
    ... of the person(s) in the Company responsible for decision-making. 2. The report shall be presented to the board of directors or relevant board committee and posted on the Company's website. Stockholder Supporting Statement As long-term shareholders of Waste Management, we support transparency and...

  • Page 66
    ... the Company's Code of Conduct, disseminated to all employees. It too is available to the public under the Investor Relations - Corporate Governance tab at www.wm.com. Waste Management believes it is important to participate in the political process because it is of intrinsic benefit to our business...

  • Page 67
    ... activity of such associations is not necessarily representative of a position of the Company. The Board believes disclosure of the Company's current policies and practices with regard to political contributions, together with applicable federal, state and local reporting requirements, provide...

  • Page 68
    ...Waste Management Common Stock. The proposal has been included verbatim as we received it. Stockholder Proposal RESOLVED: The shareholders ask the board of directors to adopt a policy that in the event of a change in control (as defined under any applicable employment agreement, equity incentive plan...

  • Page 69
    ... compensation arrangements. Competitive disadvantage in attracting and retaining executives The proponent's supporting statement asserts that over a third of the largest 200 companies now pro rate, forfeit, or only partially vest performance shares upon a change of control. Waste Management...

  • Page 70
    ..., comprised of six independent, non-management directors, is in the best position to set the terms of executive compensation arrangements. Our stockholders have evidenced their overwhelming support of the MD&C Committee's actions, with 97%, 97%, 96% and 97% of shares present and entitled to vote...

  • Page 71
    ... terms shall have the meanings set forth below: (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder. (c) "Committee" means the Administrative Committee of the Waste Management Employee Benefit...

  • Page 72
    ..., Army, Navy, Marines, Coast Guard, Public Health Service Corps or National Guard, and the employee is either drafted or a member of the Reserves called to active duty. (n) "Offering Period" means each six-month period that begins and ends on the business days that coincide with January 1 through...

  • Page 73
    ..., request advice or assistance, or employ such other persons as it deems necessary or appropriate for the proper administration of the Plan, including, but not limited to employing a brokerage firm, bank or other financial institution to assist in the purchase of shares, delivery of reports or other...

  • Page 74
    ... the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company, or (ii) which permits such Eligible Employee's rights to purchase stock under all employee stock purchase plans of the Company and its Subsidiaries to accrue at a rate which exceeds...

  • Page 75
    ... Plan. The Board may at any time, or from time to time, amend the Plan in any respect; provided, however, that the Plan may not be amended in any way that will cause rights issued under the Plan to fail to meet the requirements for employee stock purchase plans as defined in Section 423 of the Code...

  • Page 76
    ... shares of Common Stock under the Plan, and the Company's obligation to sell and deliver shares upon the exercise of options to purchase shares shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or governmental agency...

  • Page 77
    Form 10-K

  • Page 78
    ... transition period from to Commission file number 1-12154 Waste Management, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware (I.R.S. Employer Identification No.) 73-1309529 (Address of principal executive offices...

  • Page 79
    ... ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services ...PART IV Exhibits, Financial Statement Schedules...

  • Page 80
    ... the Consolidated Financial Statements. Our principal executive offices are located at 1001 Fannin Street, Suite 4000, Houston, Texas 77002. Our telephone number at that address is (713) 512-6200. Our website address is www.wm.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and...

  • Page 81
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 82
    ... acquired RCI operations complement and expand the Company's existing assets and operations in Quebec. The table below shows the total revenues (in millions) contributed annually by our Solid Waste and Wheelabrator businesses, in the three-year period ended December 31, 2014. More information about...

  • Page 83
    ... or weight of the waste collected, distance to the disposal facility, labor costs, cost of disposal and general market factors. As part of the service, we provide steel containers to most customers to store their solid waste between pick-up dates. Containers vary in size and type according to the...

  • Page 84
    ..., asset impairments (other than goodwill) and unusual items" in the Consolidated Statement of Operations. In conjunction with the sale, the Company entered into several agreements to dispose of a minimum number of tons of waste at certain Wheelabrator facilities. These agreements generally provide...

  • Page 85
    ...(i) construction and remediation services; (ii) services associated with the disposal of fly ash, residue generated from the combustion of coal and other fuel stocks; (iii) in-plant services, where our employees work full-time inside our customers' facilities to provide full-service waste management...

  • Page 86
    ... costs and amount and type of equipment furnished to the customer. We face intense competition in our Solid Waste business based on pricing and quality of service. We have also begun competing for business based on breadth of service offerings. As companies, individuals and communities look for ways...

  • Page 87
    ..., safety and transportation laws and regulations. These laws and regulations are administered by the U.S. Environmental Protection Agency ("EPA"), Environment Canada, and various other federal, state, provincial and local environmental, zoning, transportation, land use, health and safety agencies in...

  • Page 88
    ... to collect and manage solid waste in an environmentally sound manner, a significant amount of our capital expenditures are related, either directly or indirectly, to environmental protection measures, including compliance with federal, state or provincial and local rules. There are costs associated...

  • Page 89
    ...Defense Fund to evaluate the 1996 NSPS for new landfills as required by the Clean Air Act every eight years and revise them if deemed necessary. The EPA published a proposed NSPS rule July 17, 2014 and plans to finalize this rule by March 31, 2015. Where we identified potential for increased capital...

  • Page 90
    ... the Ozone rule proposed in December 2014, and related PSD increment/ significance thresholds could affect the cost, timeliness and availability of air permits for new and modified large municipal solid waste landfills and landfill gas-to-energy facilities. In general, controlling emissions involves...

  • Page 91
    ... on interstate transportation of out-of-state or out-of-jurisdiction waste or certain types of flow control, or courts' interpretations of interstate waste and flow control legislation, could adversely affect our solid and hazardous waste management services. Additionally, regulations establishing...

  • Page 92
    ... agreements to address these increased costs and are working with stakeholders to educate the general public on the need to recycle properly. Hydraulic Fracturing Regulation Our Energy Services line of business provides specialized environmental management and disposal services for oil and gas...

  • Page 93
    Federal, State and Local Climate Change Initiatives In light of regulatory and business developments related to concerns about climate change, we have identified a strategic business opportunity to provide our public and private sector customers with sustainable solutions to reduce their GHG ...

  • Page 94
    ... employees, customers or investors may not embrace and support our strategy. We may not be able to hire or retain the personnel necessary to manage our strategy effectively. In efforts to enhance our revenues, we have implemented price increases and environmental fees, and we have continued our fuel...

  • Page 95
    ... impact on our business, and compliance with such regulations is costly. A large number of complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation and related matters. In recent years, we have perceived an increase in both the...

  • Page 96
    ... on interstate transportation of outof-state or out-of-jurisdiction waste certain types of flow control, or courts' interpretations of interstate waste and flow control legislation, could adversely affect our solid and hazardous waste management services. Additionally, regulations establishing...

  • Page 97
    ... to industry conditions beyond our control, in addition to changes in oil and gas prices. Changes in laws or government regulations regarding GHG emissions from oil and gas operations and/or hydraulic fracturing could increase our customers' costs of doing business and reduce oil and gas exploration...

  • Page 98
    .... The Waste Management brand name, trademarks and logos and our reputation are powerful sales and marketing tools, and we devote significant resources to promoting and protecting them. Adverse publicity, whether or not justified, relating to activities by our operations, employees or agents...

  • Page 99
    ... litigation. Costs to remediate or restore the condition of closed sites may be significant. General economic conditions can directly and adversely affect our revenues and our income from operations margins. Our business is directly affected by changes in national and general economic factors that...

  • Page 100
    ...of the Consolidated Financial Statements for more information. Regardless of any offsetting surcharge programs, increased operating costs due to higher diesel fuel prices will decrease our income from operations margins. We are expanding our compressed natural gas ("CNG") truck fleet, which makes us...

  • Page 101
    ... customers' personal information, private information about employees, and financial and strategic information about the Company and its business partners. We also rely on a Payment Card Industry compliant third party to protect our customers' credit card information. Further, as the Company...

  • Page 102
    .... Our business is subject to operational and safety risks, including the risk of personal injury to employees and others. Providing environmental and waste management services, including constructing and operating landfills, involves risks such as truck accidents, equipment defects, malfunctions...

  • Page 103
    ...to any number of events that could cause impairments to our assets. In accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we capitalize certain expenditures and advances relating to disposal site development, expansion projects, acquisitions, software development costs and other...

  • Page 104
    ... or foreign laws or regulations. Some of our projects and new business may be conducted in countries where corruption has historically been prevalent. It is our policy to comply with all applicable anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, and with applicable local laws of...

  • Page 105
    ... to make investments in additional equipment and property for expansion, for replacement of assets, and in connection with our strategic growth plans. For more information, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included within this report...

  • Page 106
    ...high and low per-share sales prices for our common stock as reported on the NYSE: High Low 2013 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ...2014 First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ...2015 First Quarter (through February 6, 2015) ...29 $53.49...

  • Page 107
    ...6, 2015, the closing sales price as reported on the NYSE was $52.44 per share. The number of holders of record of our common stock on February 6, 2015 was 11,821. The graph below shows the relative investment performance of Waste Management, Inc. common stock, the Dow Jones Waste & Disposal Services...

  • Page 108
    .... 2014(a) Years Ended December 31, 2013(a) 2012(a) 2011 (In millions, except per share amounts) 2010 Statement of Operations Data: Operating revenues ...Costs and expenses: Operating ...Selling, general and administrative ...Depreciation and amortization ...Restructuring ...Goodwill impairments...

  • Page 109
    ...-term value to our stockholders by successfully executing our strategy: to know and service our customers better than anyone in our industry, to extract more value from the materials we manage, and to innovate and optimize our business. We plan to accomplish our strategic goals through competitive...

  • Page 110
    ...; (ii) divestitures of our Puerto Rico operations and certain other collection and landfill assets as well as the December 2014 sale of our Wheelabrator business, which decreased our revenues by $90 million and (iii) foreign currency translation of $61 million related to our Canadian operations...

  • Page 111
    ... to use these proceeds in support of our strategic growth plans to drive long-term stockholder value, with our priority being on making accretive acquisitions in our Solid Waste business. We also expect our focus on our five key priorities set forth above - Customers; Traditional Waste Business...

  • Page 112
    ... on capital spending management. The increase in proceeds from divestitures of businesses and other assets (net of cash divested) for the year ended December 31, 2014 from the comparable period in 2013 is largely driven by (i) the sale of our Wheelabrator business in the fourth quarter of 2014 for...

  • Page 113
    ... to acquire substantially all of the assets of RCI Environnement, Inc. ("RCI"), the largest waste management company in Quebec, and certain related entities. Total consideration, inclusive of amounts for estimated working capital, was C$515 million, or $487 million. RCI provides collection, transfer...

  • Page 114
    ... of our financial statements. Landfills Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement obligations...

  • Page 115
    ... and processing time periods for approvals in the jurisdiction in which the landfill is located; We have a legal right to use or obtain land to be included in the expansion plan; There are no significant known technical, legal, community, business, or political restrictions or similar issues that...

  • Page 116
    ... If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately. Environmental Remediation Liabilities We are subject to an array of laws and regulations relating to the protection of the environment. Under...

  • Page 117
    ... amount and type of waste hauled to the site and the number of years we were associated with the site. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by...

  • Page 118
    ... and Note 13 to the Consolidated Financial Statements for additional information related to landfill asset impairments recognized during the reported periods. Goodwill - At least annually, and more frequently if warranted, we assess our goodwill for impairment using Level 3 inputs. We assess whether...

  • Page 119
    ... Results of Operations - Goodwill Impairments and Notes 6 and 13 to the Consolidated Financial Statements for additional information related to goodwill impairments recognized during the reported periods. Indefinite-Lived Intangible Assets Other Than Goodwill - At least annually, and more frequently...

  • Page 120
    ... solid waste at a disposal site. Recycling revenue generally consists of tipping fees and the sale of recyclable commodities to third parties. The fees we charge for our collection, disposal, transfer and recycling services generally include fuel surcharges, which are indexed to current market costs...

  • Page 121
    ... revenues from our major lines of business is reflected in the table below (in millions): Years Ended December 31, 2014 2013 2012 Collection: Commercial ...Residential ...Industrial ...Other ...Total collection ...Landfill ...Transfer ...Wheelabrator ...Recycling ...Other ...Intercompany ...Total...

  • Page 122
    ...impacts of divestitures (in millions): Denominator 2014 2013 Related-business revenues: Collection, landfill and transfer ...Waste-to-energy disposal ...Collection and disposal ...Recycling commodities ...Electricity ...Fuel surcharges and mandated fees ...Total Company ... $11,103 409 11,512 1,431...

  • Page 123
    ...of our collection, transfer, landfill and waste-to-energy disposal operations, exclusive of volume changes. Revenue growth from collection and disposal average yield includes not only base rate changes and environmental and service fee increases, but also (i) certain average price changes related to...

  • Page 124
    ... year periods, driven primarily by declines in our collection business. Our volume fluctuations are generally attributable to economic conditions, pricing changes, competition and diversion of waste by customers. Our revenue growth due to volume has been negatively affected by our pricing strategy...

  • Page 125
    ...: 2014 Period-to-Period Change 2013 Period-to-Period Change 2012 Labor and related benefits ...Transfer and disposal costs ...Maintenance and repairs ...Subcontractor costs ...Cost of goods sold ...Fuel ...Disposal and franchise fees and taxes ...Landfill operating costs ...Risk management ...Other...

  • Page 126
    ... volumes and (ii) higher municipal franchise fees relating to the collection line of business. A disposal surcharge at one of our waste-to-energy facilities in 2013 affected the comparability in both periods. Landfill operating costs - Significant items affecting the comparability of expenses for...

  • Page 127
    ... gains on the sale of assets. These increases were offset, in part, by favorable adjustments to contingent consideration associated with acquisitions. Selling, General and Administrative Our selling, general and administrative expenses consist of (i) labor and related benefit costs, which include...

  • Page 128
    ...in 2014 is primarily related to the amortization of customer relationships acquired through our acquisition of RCI. Restructuring In August 2014, we announced a consolidation and realignment of several Corporate functions to better support achievement of the Company's strategic goals, including cost...

  • Page 129
    ... of goodwill impairment charges, primarily related to (i) $483 million associated with our Wheelabrator business; (ii) $10 million associated with our Puerto Rico operations and (iii) $9 million associated with a majority-owned waste diversion technology company. During the year ended December...

  • Page 130
    ... information related to the accounting policy and analysis involved in identifying and calculating impairments. In addition to the impairments discussed above, we are continuing to evaluate opportunities associated with the sale or discontinued use of assets that may no longer meet our strategic...

  • Page 131
    ...Other significant items affecting the results of operations of our Solid Waste business during the three years ended December 31, 2014 are summarized below: • Our base business benefited from (i) internal revenue growth, principally in our collection and disposal business; (ii) increased fuel cost...

  • Page 132
    ... consideration associated with the Greenstar acquisition, offset by higher administrative and restructuring costs associated with the acquired operations in 2013; and Improved results in our organics and medical waste services in 2013. • Corporate and Other - Significant items affecting...

  • Page 133
    ...incurred significant fees during 2012 resulting from company-wide initiatives; and Favorable risk management allocation in 2014 and higher year-over-year risk management expense in 2013 primarily due to increased overall costs associated with auto and general liability insurance. • • Interest...

  • Page 134
    ... below: • Tax Implications of Divestitures - During 2014, the Company recorded a net gain of $515 million primarily related to the divestiture of our Wheelabrator business, our Puerto Rico operations and certain landfill and collection operations in our Eastern Canada Area. Had this net gain been...

  • Page 135
    ... charge related to a majority-owned waste diversion technology company discussed above in (Income) Expense from Divestitures, Asset Impairments (Other than Goodwill) and Unusual Items. Landfill and Environmental Remediation Discussion and Analysis We owned or operated 247 solid waste and five secure...

  • Page 136
    .... The following table reflects landfill capacity and airspace changes, as measured in tons of waste, for landfills owned or operated by us during the years ended December 31, 2014 and 2013 (in millions): December 31, 2014 Remaining Permitted Expansion Total Capacity Capacity Capacity December 31...

  • Page 137
    ... the applicable regulatory agency, we generally transfer the management of the site, including any remediation activities, to our closed sites management group. As of December 31, 2014, our closed sites management group managed 210 closed landfills. Landfill Assets - We capitalize various costs that...

  • Page 138
    ... remediation costs ...Other landfill site costs ...Total landfill operating costs ... $ 88 14 84 9 71 $266 $ 87 (10) 77 10 68 $232 $ 84 6 67 - 67 $224 The comparison of these costs for the reported periods has been significantly affected by accounting for changes in the risk-free discount rate...

  • Page 139
    ... arise during the year as a result of changing business conditions or new opportunities. In addition to our working capital needs for the general and administrative costs of our ongoing operations, we have cash requirements for: (i) the construction and expansion of our landfills; (ii) additions to...

  • Page 140
    ... date of purchase. The increase at December 31, 2014 is primarily related to the December 2014 sale of our Wheelabrator business. Restricted trust and escrow accounts - Restricted trust and escrow accounts consist primarily of funds deposited for purposes of settling landfill final capping, closure...

  • Page 141
    ... increased by $1.2 billion, on a year-over-year basis. Certain of the more significant drivers of our earnings improvement include: • • Lower non-cash impairment charges of $652 million in 2014 as compared to 2013; and The net gain on the sale of our Wheelabrator business of $519 million in 2014...

  • Page 142
    ..., which are affected by both revenue changes and timing of payments received, and accounts payable, which are affected by both cost changes and timing of payments. Additionally, accruals for our annual incentive plan favorably affected our working capital comparison, driven by both higher incentive...

  • Page 143
    ... oil and gas producing properties and $14 million related to certain of our medical waste service operations and a transfer station in our Greater Mid-Atlantic Area. The remaining amount reported for 2013, as well as the proceeds in 2012 generally relate to the sale of fixed assets. • Acquisitions...

  • Page 144
    ... of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations. • Dividend payments - For the periods presented, all dividends have been declared and approved by our Board of Directors and paid in accordance with our financial plans...

  • Page 145
    ... place additional tons within the permitted airspace at our landfills. (b) The amounts reported here represent the scheduled principal payments related to our long-term debt, excluding related interest. Refer to Note 7 to the Consolidated Financial Statements for information regarding interest rates...

  • Page 146
    ... of operations or liquidity. New Accounting Standard Pending Adoption In May 2014, the FASB amended authoritative guidance associated with revenue recognition. The amended guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount...

  • Page 147
    ... business, we are exposed to market risks, including changes in interest rates, Canadian currency rates and certain commodity prices. From time to time, we use derivatives to manage some portion of these risks. Our derivatives are agreements with independent counterparties that provide for payments...

  • Page 148
    ... divested in conjunction with the sale of our Wheelabrator business in December 2014. Alternatively, we attempt to manage these risks through operational strategies that focus on capturing our costs in the prices we charge our customers for the services provided. Accordingly, as the market...

  • Page 149
    ... Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Management's Report on Internal Control Over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of December 31, 2014 and 2013 ...Consolidated Statements of Operations for the Years...

  • Page 150
    ... of compliance with the policies or procedures may deteriorate. Management of the Company assessed the effectiveness of our internal control over financial reporting as of December 31, 2014 based on the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of...

  • Page 151
    ... PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Waste Management, Inc. We have audited Waste Management, Inc.'s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee...

  • Page 152
    ... years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Waste Management, Inc.'s internal control over financial reporting...

  • Page 153
    ...Landfill and environmental remediation liabilities ...Other liabilities ...Total liabilities ...Commitments and contingencies Equity: Waste Management, Inc. stockholders' equity: Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued ...Additional paid-in capital...

  • Page 154
    WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) Years Ended December 31, 2014 2013 2012 Operating revenues: Service revenues ...$12,646 $12,566 $12,327 Tangible product revenues ...1,350 1,417 1,322 Total operating revenues ...13,996 13,983 13,...

  • Page 155
    ...) Other assets ...22 4 105 Accounts payable and accrued liabilities ...117 (27) (57) Deferred revenues and other liabilities ...(117) (94) (85) Net cash provided by operating activities ...Cash flows from investing activities: Acquisitions of businesses, net of cash acquired ...Capital expenditures...

  • Page 156
    WASTE MANAGEMENT, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions, Except Shares in Thousands) Waste Management, Inc. Stockholders' Equity Common Stock Total Shares Accumulated Additional Other Paid-In Retained Comprehensive Amounts Capital Earnings Income (Loss) Treasury Stock Shares...

  • Page 157
    ... sale of our Wheelabrator business, which provided waste-to-energy services and managed waste-to-energy facilities and independent power production plants. Refer to Note 19 for additional information related to our divestitures. We evaluate, oversee and manage the financial performance of our Solid...

  • Page 158
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Reclassifications When necessary, reclassifications have been made to our prior period consolidated financial information in order to conform to the current year presentation. 3. Summary of Significant Accounting ...

  • Page 159
    ... equipment for groundwater and landfill gas; and directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes asset retirement costs, which represent estimates of future costs associated...

  • Page 160
    ...result in a material change in these liabilities, related assets and results of operations. We assess the appropriateness of the estimates used to develop our recorded balances annually, or more often if significant facts change. Changes in inflation rates or the estimated costs, timing or extent of...

  • Page 161
    ... and processing time periods for approvals in the jurisdiction in which the landfill is located; We have a legal right to use or obtain land to be included in the expansion plan; There are no significant known technical, legal, community, business, or political restrictions or similar issues that...

  • Page 162
    ... If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately. Environmental Remediation Liabilities We are subject to an array of laws and regulations relating to the protection of the environment. Under...

  • Page 163
    ... amount and type of waste hauled to the site and the number of years we were associated with the site. Next, we review the same type of information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by...

  • Page 164
    ...improvements - excluding waste-to-energy facilities ...Waste-to-energy facilities and related equipment ...Furniture, fixtures and office equipment ... 3 to 10 10 to 20 3 to 30 5 to 40 up to 50 3 to 10 We include capitalized costs associated with developing or obtaining internal-use software within...

  • Page 165
    .... All acquisition-related transaction costs have been expensed as incurred. Goodwill and Other Intangible Assets Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. We do not amortize goodwill, but as discussed in the Asset Impairments section...

  • Page 166
    ..., goodwill and other indefinite-lived intangible assets, as described below. Landfills - The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste...

  • Page 167
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) which was influenced, in part, by our acquisition of RCI Environnement, Inc. ("RCI"), we determined that the future costs to construct these landfills could be avoided as we are able to allocate disposal that would have ...

  • Page 168
    ...and (v) changes in the fair value of the financial instruments held in the trust fund or escrow accounts. Tax-Exempt Bond Funds - We obtain funds from the issuance of industrial revenue bonds for the construction of disposal facilities and for equipment necessary to provide waste management services...

  • Page 169
    ... exposure to changes in exchange rates for anticipated intercompany debt transactions, and related interest payments, between Waste Management Holdings, Inc., a wholly-owned subsidiary ("WM Holdings"), and its Canadian subsidiaries. Prior to the sale of our Wheelabrator business, we used electricity...

  • Page 170
    ... customers increased direct and indirect costs incurred because of changes in market prices for fuel. We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer...

  • Page 171
    ... on a quarterly basis and equipment rentals. These advance billings are included in deferred revenues and recognized as revenue in the period service is provided. Capitalized Interest We capitalize interest on certain projects under development, including internal-use software and landfill expansion...

  • Page 172
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Supplemental Cash Flow Information Cash paid during the year (in millions): Years Ended December 31, 2014 2013 2012 Interest, net of capitalized interest and periodic settlements from interest rate swap agreements ......

  • Page 173
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) approximately $23 million due to the acceleration of the timing of closure and post-closure activities at two of our landfills related to landfill asset impairments, discussed further in Note 13. (b) The amount reported ...

  • Page 174
    ... any events or changes in circumstances that indicated that an impairment was more likely than not during interim periods in 2014, 2013 or 2012. During our annual 2013 impairment test of our goodwill balances we determined the fair value of our Wheelabrator business had declined and the associated...

  • Page 175
    ... or have routine, administrative renewal processes. Additional information related to other intangible assets acquired through business combinations is included in Note 19. As of December 31, 2014, expected annual amortization expense related to other intangible assets is $69 million in 2015; $62...

  • Page 176
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Debt Classification As of December 31, 2014, our current debt balances include (i) $947 million of senior notes repaid with available cash in January 2015 that the Company decided to redeem in advance of their scheduled ...

  • Page 177
    ...value hedge accounting for interest rate swap contracts. Refer to Notes 8 and 14 for additional information regarding our interest rate derivatives. Tax-Exempt Bonds - During the year ended December 31, 2014, we repaid $123 million of our tax-exempt bonds with available cash. Scheduled Debt Payments...

  • Page 178
    ... sale of that business in December 2014. We have not offset fair value amounts recognized for our derivative instruments. For information related to the inputs used to measure our derivative assets and liabilities at fair value, refer to Note 18. Fair Value Hedges Interest Rate Swaps In prior years...

  • Page 179
    ... in the same financial statement line item as offsetting gains or losses on the related cross currency swaps. There was no significant ineffectiveness associated with our cash flow hedges during the years ended December 31, 2014, 2013 or 2012. Refer to Note 14 for information regarding the impacts...

  • Page 180
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Credit-Risk-Related Contingent Features Our interest rate derivative instruments have in the past, and may in the future, contain provisions related to the Company's credit rating. These provisions generally provide that...

  • Page 181
    ...303 Tax Implications of Divestitures - During 2014, the Company recorded a net gain of $515 million primarily related to the divestiture of our Wheelabrator business, our Puerto Rico operations and certain landfill and collection operations in our Eastern Canada Area. Had this net gain been fully...

  • Page 182
    ... jurisdictions for tax years that date back to 2009, with the exception of affirmative claims in a limited number of jurisdictions that date back to 2000. We are also under audit in Canada for the tax years 2012 and 2013. In 2011, we acquired Oakleaf Global Holdings ("Oakleaf"), which is subject...

  • Page 183
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Deferred Tax Assets (Liabilities) The components of net deferred tax assets (liabilities) are as follows (in millions): December 31, 2014 2013 Deferred tax assets: Net operating loss, capital loss and tax credit ...

  • Page 184
    ...related to the capital expenditures would have otherwise been taken. 10. Employee Benefit Plans Defined Contribution Plans - Waste Management sponsors 401(k) retirement savings plans that cover employees, except those working subject to collective bargaining agreements that do not allow for coverage...

  • Page 185
    ... Plan Number Pension Protection Act Reported Status(a) Expiration Date Company of Collective Contributions(d) FIP/RP Bargaining Status(b),(c) 2014 2013 2012 Agreement(s) Pension Fund Automotive Industries Pension Plan Central States, Southeast and Southwest Areas Pension Plan Local 731 Private...

  • Page 186
    ... health and welfare plans that also provide other postretirement employee benefits. Funding of benefit payments for plan participants are made at rates as negotiated in the respective collective bargaining agreements as costs are incurred. 11. Commitments and Contingencies Financial Instruments...

  • Page 187
    ... and personal property, workers' compensation, directors' and officers' liability, pollution legal liability and other coverages we believe are customary to the industry. Our exposure to loss for insurance claims is generally limited to the per incident deductible under the related insurance policy...

  • Page 188
    ... generally are based on per ton rates for waste actually received at our transfer stations, landfills or waste-to-energy facilities. Royalty agreements that are non-cancelable and require fixed or minimum payments are included in our "Capital leases and other" debt obligations in our Consolidated...

  • Page 189
    ... are successful, WM has agreed to retain the guarantees and, in exchange, receive a credit support fee. The most significant of these guarantees specifically define WM's maximum financial obligation over the course of the relevant agreements, and as of December 31, 2014, WM's maximum future payments...

  • Page 190
    ... waste generators and other waste transportation and disposal companies and seek to allocate or recover costs associated with site investigation and remediation, which costs could be substantial and could have a material adverse effect on our consolidated financial statements. At some of the sites...

  • Page 191
    ..., in certain cases, on the basis of having conducted environmental remediation activities at sites. Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and health care examinations of allegedly affected persons for a substantial period of time even where...

  • Page 192
    ... the United States and Canada. As a result of some of these agreements, certain of our subsidiaries are participating employers in a number of trustee-managed multiemployer defined benefit pension plans for the covered employees. Refer to Note 10 for additional information about our participation in...

  • Page 193
    ...following table summarizes pre-tax restructuring charges, including employee severance and benefit costs and other charges, for the years ended December 31 for the respective periods (in millions): 2014 2013 2012 Solid Waste ...Wheelabrator ...Corporate and Other ... $10 1 71 $82 $ 7 1 10 $18 $19...

  • Page 194
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) During the year ended December 31, 2013, we recognized a total of $18 million of pre-tax restructuring charges, of which $7 million was related to employee severance and benefit costs, including costs associated with our...

  • Page 195
    ... of our consideration of management's decision in the fourth quarter of 2013 not to actively pursue expansion and/or development of such landfills. These charges were primarily associated with two landfills in our Eastern Canada Area, which are no longer accepting waste. We had previously concluded...

  • Page 196
    ... in waste diversion technology companies accounted for under the cost method. We wrote down the carrying value of our investments to their fair value. In the first quarter of 2014, we sold our investment in SEG, which was part of our Wheelabrator business. We received cash proceeds from the sale of...

  • Page 197
    ...of Waste Management, Inc. stockholders' equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income): Foreign PostAvailableCurrency Retirement Derivative for-Sale Translation Benefit Instruments Securities Adjustments Plans Total...

  • Page 198
    ... the period ...15. Capital Stock, Dividends and Share Repurchases Capital Stock $ 5 We have 1.5 billion shares of authorized common stock with a par value of $0.01 per common share. As of December 31, 2014, we had 458.5 million shares of common stock issued and outstanding. The Board of Directors...

  • Page 199
    ... Directors has authorized up to $1 billion in future share repurchases. Any future share repurchases will be made at the discretion of management, and will depend on factors similar to those considered by the Board in making dividend declarations. 16. Stock-Based Compensation Employee Stock Purchase...

  • Page 200
    ... Management Development and Compensation Committee of our Board of Directors. The 2014 annual Incentive Plan awards granted to the Company's senior leadership team, which generally includes the Company's executive officers, included a combination of PSUs and stock options. The annual Incentive Plan...

  • Page 201
    ... ended December 31, 2014 was performed by the Management Development and Compensation Committee in February 2015. Accordingly, vesting information for such awards is not included in the table above as of December 31, 2014. The "vested" PSUs are for the three-year performance period ended December 31...

  • Page 202
    ... the award recipient's death or disability. In the event of a recipient's retirement, stock options shall continue to vest pursuant to the original schedule set forth in the award agreement. If the recipient is terminated by the Company without cause or voluntarily resigns, the recipient shall be...

  • Page 203
    ... be recognized over a weighted average period of 1.4 years for unvested RSU, PSU and stock option awards issued and outstanding. Non-Employee Director Plan Our non-employee directors currently receive annual grants of shares of our common stock, generally payable in two equal installments, under the...

  • Page 204
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 17. Earnings Per Share Basic and diluted earnings per share were computed using the following common share data (shares in millions): Years Ended December 31, 2014 2013 2012 Number of common shares outstanding at year-...

  • Page 205
    ... Using Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs (Level 1) (Level 2) (Level 3) Assets: Money market funds ...Fixed-income securities ...Redeemable preferred stock ...Foreign currency derivatives ...Total assets ...Liabilities: Interest rate...

  • Page 206
    ...due to an increase in the price per share established in a recent stock issuance. In addition, we received $15 million of redeemable preferred stock in conjunction with the sale of our Puerto Rico operations and certain other collection and landfill assets in the second quarter of 2014, as discussed...

  • Page 207
    ... On September 17, 2014, the Company signed a definitive agreement to acquire the outstanding stock of Deffenbaugh Disposal, Inc., one of the largest privately owned collection and disposal firms in the Midwest. Closing of the acquisition is expected to occur in early 2015, subject to the receipt...

  • Page 208
    ...$481 million, to acquire substantially all of the assets of RCI, the largest waste management company in Quebec, and certain related entities. Total consideration, inclusive of amounts for estimated working capital, was C$515 million, or $487 million. RCI provides collection, transfer, recycling and...

  • Page 209
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table presents the final allocations of the purchase price for the Greenstar and RCI acquisitions (in millions): Greenstar RCI Accounts and other receivables ...Parts and supplies ...Other current assets ...

  • Page 210
    ... operations. The remaining amounts reported in the Consolidated Statement of Cash Flows generally relate to the sale of fixed assets. Divestiture of Wheelabrator Business On December 19, 2014, we sold our Wheelabrator business to an affiliate of Energy Capital Partners and received cash proceeds of...

  • Page 211
    ... of 2014, we sold our Puerto Rico operations and certain other collection and landfill assets which were included in Tier 3 and Tier 1, respectively, of our Solid Waste business. We received proceeds from the sale of $80 million, consisting of $65 million of cash and $15 million of preferred stock...

  • Page 212
    ...WM's consolidation. Significant Unconsolidated Variable Interest Entities Investment in U.K. Waste-to-Energy and Recycling Entity - In the first quarter of 2012, we formed a U.K. joint venture (the "JV"), together with a commercial waste management company ("Partner"), to develop, construct, operate...

  • Page 213
    ... or (ii) power over the trusts' significant activities is shared. We account for the trusts for which we are the sole beneficiary as long-term "Other assets" in our Consolidated Balance Sheet. We reflect our interests in the unrealized gains and losses on available-for-sale securities held by these...

  • Page 214
    ... of the United States and Eastern Canada. Our Wheelabrator business, which managed waste-to-energy facilities and independent power production plants, continued to be a separate reportable segment until the sale of the business in the fourth quarter of 2014 as it met the quantitative disclosure...

  • Page 215
    ...(e) The income from operations provided by our Solid Waste business is generally indicative of the margins provided by our collection, landfill, transfer and recycling businesses. From time to time the operating results of our reportable segments are significantly affected by certain transactions or...

  • Page 216
    ... following table presents changes in goodwill during 2013 and 2014 by reportable segment (in millions): Tier 1 Solid Waste Tier 2 Tier 3 Wheelabrator Other Total Balance, December 31, 2012 ...Acquired goodwill ...Divested goodwill, net of assets held-for-sale ...Impairments ...Translation and other...

  • Page 217
    ... FINANCIAL STATEMENTS - (Continued) The mix of operating revenues from our major lines of business is reflected in the table below (in millions): Years Ended December 31, 2014 2013 2012 Commercial ...Residential ...Industrial ...Other ...Total collection ...Landfill ...Transfer ...Wheelabrator...

  • Page 218
    ... the periods indicated: First Quarter 2014 • During the first quarter of 2014, we experienced significantly higher revenues in our Wheelabrator business and the renewable energy operations in Solid Waste from temporarily higher electricity prices driven by weather-related demand. This increase in...

  • Page 219
    ... to write down assets related to waste diversion technology companies; (iii) $20 million of other-than-temporary declines in the value of investments in waste diversion technology companies accounted for under the cost method; (iv) $10 million of goodwill impairment charges associated with our...

  • Page 220
    ...(i) a $483 million charge to impair goodwill associated with our Wheelabrator business; (ii) $262 million of charges to impair certain landfills, primarily in our Eastern Canada Area; (iii) $130 million of charges to write down the carrying value of three waste-to-energy facilities; (iv) $61 million...

  • Page 221
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING BALANCE SHEETS December 31, 2014 WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents ...Other current assets ...Property and ...

  • Page 222
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING BALANCE SHEETS (Continued) December 31, 2013 WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents ...Other current assets ......

  • Page 223
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS WM WM Non-Guarantor Holdings Subsidiaries Eliminations Consolidated Year Ended December 31, 2014 Operating revenues ...$ - Costs and expenses(b) ...- Income from ...

  • Page 224
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated Year Ended December 31, 2014 Comprehensive income ...Less: Comprehensive income attributable...

  • Page 225
    WASTE MANAGEMENT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS WM WM Holdings Non-Guarantor Subsidiaries Eliminations Consolidated Year Ended December 31, 2014 Cash flows from operating activities: Consolidated net income ...Equity ...

  • Page 226
    ... activities ...Cash flows from investing activities: Acquisitions of businesses, net of cash acquired ...Capital expenditures ...Proceeds from divestitures of businesses and other assets (net of cash divested) ...Net receipts from restricted trust and escrow accounts and other, net ...Net cash...

  • Page 227
    ...258 194 24. New Accounting Standard Pending Adoption (Unaudited) In May 2014, the FASB amended authoritative guidance associated with revenue recognition. The amended guidance requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that...

  • Page 228
    ... Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, including ensuring that such information is accumulated and communicated to management (including the principal executive and financial officers) as...

  • Page 229
    ... Related Stockholder Matters. The information required by this Item is incorporated herein by reference to the sections entitled "Equity Compensation Plan Table," "Director Nominee and Officer Stock Ownership," and "Persons Owning More than 5% of Waste Management Common Stock" in the Proxy Statement...

  • Page 230
    ... duly authorized. WASTE MANAGEMENT, INC. By: /s/ DAVID P. STEINER David P. Steiner President, Chief Executive Officer and Director Date: February 17, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 231
    ...PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Waste Management, Inc. We have audited the consolidated financial statements of Waste Management, Inc. as of December 31, 2014 and 2013, and for each of the three years in the period ended December 31, 2014, and have issued our report...

  • Page 232
    WASTE MANAGEMENT, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (In Millions) Balance Beginning of Year Charged (Credited) to Income Accounts Written Off/Use of Reserve Balance End of Year 2012 - Reserves for doubtful accounts(a) ...2013 - Reserves for doubtful accounts(a) ...2014 - Reserves...

  • Page 233
    ...Stock Purchase Agreement dated July 25, 2014 by and among Granite Acquisition, Inc. and Waste Management Holdings, Inc., National Guaranty Insurance Company of Vermont, Mountain Indemnity Insurance Company, Chemical Waste Management, Inc. and Wheelabrator Technologies Inc. [incorporated by reference...

  • Page 234
    ... Stock Purchase Plan [incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed March 28, 2012]. Waste Management, Inc. 409A Deferral Savings Plan as Amended and Restated effective January 1, 2014 [incorporated by reference to Exhibit 10.2 to Form 10-Q for the period...

  • Page 235
    ... by First Amendment to Employment Agreement between USA Waste-Management Resources, LLC and Don P. Carpenter effective as of August 24, 2012 [incorporated by reference to Exhibit 10.23 to Form 10-K for the year ended December 31, 2012]. Employment Agreement between Wheelabrator Technologies Inc. and...

  • Page 236
    ... of Director and Executive Officer Indemnity Agreement [incorporated by reference to Exhibit 10.43 to Form 10-K for the year ended December 31, 2012]. Form of 2014 Senior Leadership Team Award Agreement for Long Term Incentive Compensation under the Waste Management, Inc. 2009 Stock Incentive Plan...

  • Page 237
    ... the Company is scheduled to be held at 11:00 a.m. on May 12, 2015 at: The Maury Myers Conference Center Waste Management, Inc. 1021 Main Street Houston, Texas 77002 WEB SITE www.wm.com (A) Audit Committee (C) Management Development and Compensation Committee (N) Nominating and Governance Committee

  • Page 238
    1001 Fannin, Suite 4000 - Houston, Texas 77002 www.wm.com